The New Reality of Student Debt

It is beginning to seem like a weekly occurrence that a new report comes out that sounds a warning siren about student debt loads in Canada. If you haven’t heard, according to a recent survey done by the Bank of Montreal most students who are taking student loans (58%) expect their debt number to be more than $20,000 when all is said and done. The more alarming statistic for me was that 21% felt that they would graduate with over $40,000 in debt. Finally, roughly 44% of those surveyed believed that they would be able to payback the loans within five years of graduation. I think the interesting thing about these numbers is that students are notorious for underestimating their debt profile and consequently, the actual numbers will likely be much higher than estimates.

The last year that we have solid data on student debt levels for is 2005 (I wasn’t able to determine why this was the last comprehensive data collection done – which is a pretty good question imho), and the average student debt back in that Stone Age was almost $19,000. Most estimates that I read these days place the average at over $20,000 by a fair margin. When you consider that there is still a sizable portion of the student body that takes out no loans at all, the reality for many students is that they will find themselves on the wrong side of that $20,000 fence.

Fantasy Is So Much More Palatable Though…

So what are students to do? Well to start, I believe they need to embrace the reality of the fact that their education is an investment, NOT a right, and plan accordingly. Sure, it might be an investment that benefits the rest of society, and consequently is subsidized to a huge extent – but it is still a personal investment (and easily still one of the best you can make). If you simply want to get smarter, read a book or audit a class. If you want to invest in a credential that will benefit you, then treat it like an investment and evaluate it on that basis.

After the reality of being a young adult that is using their very limited capital to invest in themselves instead of merely “living the high life” sets in, planning obviously has to take center stage. In order to maximize your investment it is necessary to figure out how to lower your costs and get the most out of your returns. For me, this boils down to cutting costs while at the same time choosing an educational path that you believe will pay dividends down the road. There is a large group of people who believe post-secondary education should only be about making yourself a well-rounded person and exploring your interests. I simply think that while that mindset is fine if you have the capital to justify it, for those of us who financially scrape by while in school, the realities of investment have to come into play at some point.

Any Chant You Can Do, I Can Do Louder…

One thing I’m not a fan off is using hundreds of hours to cause public disturbances in order to make your voice heard. I have always found it interesting that there seems to be teeming throngs of students whenever a “movement of the month” or a renewed “tuition freeze” chant needs bellowing, yet the average at your voting line near a post-secondary institution is still about 50. I’ll never understand the need to promote your cause by trying to intimidate others, or irritate them into “becoming aware” of your cause. We live in a free society where we get to vote for representatives and make our grievances heard. Just because your grievance isn’t shared by enough other voters doesn’t mean you get to destroy the social contract we all enjoy. If students simply began to vote in higher numbers I can guarantee politicians would take more notice relative to the current state of affairs. Numbers talk loudest when it comes to a vote-counting democracy after all.

If you truly believe tuition should be lowered, or education should have different priorities create a petition and get 20,000 signatures on it before mailing it to your provincial and federal representatives. It would be especially effective in an election year. Other than taking part in the democratic process (a slow-moving agent for change admittedly), today’s student has to quit looking at post-secondary education as a cheap place to hide from the world that is socially acceptable and see it for what it really is – an admirable investment that will pay gigantic rewards over the course of their career.


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Here in the States, we’re grappling with the fact that we’re carrying a total of $1 trillion in student debt. When I graduated with my bachelors in 2004, my undergrad debt was only $17k (thanks to some very good financial moves by my parents) – but my grad school debt bumped that up to $56k before I started making payments. These days, I’m back down to a manageable $14k… but it’s been almost a decade… At least I have a next-to-nothing (1.75%) interest rate…

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